DEF 14A of Lowes Companies Inc
Filed Apr 18, 2024 · FY20230001193125-24-100050
Our Executive Compensation Program is Linked to Our Strategy
| • | Maximize long-term shareholder value through alignment of executive and shareholder interests; |
Proposal 1: Election of Directors
Proposal 1: Election of Directors We are asking our shareholders to vote on the election of the 13 candidates nominated by the Board of Directors for election as directors. The Board has nominated the 13 candidates named in this proposal for election as directors at the Annual Meeting. If elected, each nominee will serve until his or her term expires at the 2025 Annual Meeting of Shareholders or until his or her successor is duly elected and qualified. Each nominee has agreed to be named in this Proxy Statement and to serve if elected. All of the nominees are currently serving as directors except Navdeep Gupta and Lawrence Simkins, whose Board service would commence upon their election at the 2024 Annual Meeting of Shareholders. The other current directors were elected to the Board at the 2023 Annual Meeting of Shareholders. The Nominating and Governance Committee identifies, considers and recommends to the Board director candidates who have expertise that would complement and enhance the current Board’s skills and experience. It also reviews the existing time commitments of director candidates to confirm that they do not have any obligations that would conflict with the time commitments of a director of the Company. The Nominating and Governance Committee also looks to recruit candidates with different perspectives so that they can contribute to the cognitive diversity on the Board, while also recognizing the importance of having diversity of age, gender, race and ethnicity on the Board. The Nominating and Governance Committee considers a diverse slate of candidates for nomination to the Board from a number of sources, including third-party search firms and business and organizational contacts of the directors and management. Among our 13 nominees for election to the Board, four self-identify as women and six self-identify as people of color (meaning an individual who self-identifies as African American or Black, Hispanic or Latino, Asian, Native Hawaiian or Other Pacific Islander, American Indian or Alaska Native or Two or More Races or Ethnicities). The Board has remained mindful of refreshing its membership, with seven new independent director nominees in the last six years. At the same time, the Company also believes that it benefits from having several longer tenured directors on the Board, including our Lead Independent Director, who are familiar with the Company’s business and can help facilitate the transfer of institutional knowledge. We believe the average tenure for our independent director nominees of 5.9 years reflects the appropriate balance the Board seeks between different perspectives brought by longer-serving and new directors. Although the Company knows of no reason why any of the nominees would not be able to serve, if any nominee is unavailable for election, the proxy holders intend to vote your shares for any substitute nominee proposed by the Board. At the Annual Meeting, proxies cannot be voted for a greater number of individuals than the 13 nominees named in this Proxy Statement.
Proposal 1: Election of Directors
| | The Board of Directors unanimously recommends a vote “FOR” the election of each of the 13 nominees named in this proposal. |
Proposal 1: Election of Directors
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Proposal 1: Election of Directors
IDENTIFYING AND EVALUATING DIRECTOR NOMINEES
Director Nominees’ Skills, Backgrounds and Expertise
Director Nominees’ Skills, Backgrounds and Expertise Our director nominees possess a balance of distinguished leadership, diverse perspectives, strategic skill sets, backgrounds and professional experience relevant to our business and strategic objectives.
Director Nominees’ Skills, Backgrounds and Expertise
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Director Nominees’ Skills, Backgrounds and Expertise
DIRECTOR NOMINEES
Director Nominees’ Skills, Backgrounds and Expertise
| | RAUL ALVAREZ | | | Independent Director Since: 2010 Age: 68 Lowe’s Board Committees: • Compensation, Chair • Sustainability • Technology |
Director Nominees’ Skills, Backgrounds and Expertise
Career Highlights:
Director Nominees’ Skills, Backgrounds and Expertise
| • | 2017–present Operating Partner of Advent International Corporation, a global private equity firm |
Director Nominees’ Skills, Backgrounds and Expertise
| • | 2013–2018 Chairman of Skylark Co., Ltd., a leading restaurant operator in Japan |
Director Nominees’ Skills, Backgrounds and Expertise
| • | 2006–2009 President and Chief Operating Officer of McDonald’s Corporation, a leading global foodservice retailer |
Director Nominees’ Skills, Backgrounds and Expertise
| • | 1994–2006 Variety of leadership positions at McDonald’s Corporation, including President of McDonald’s North America and President of McDonald’s USA |
Director Nominees’ Skills, Backgrounds and Expertise
| • | Prior to 1994 Variety of leadership positions at Wendy’s International Inc. and Burger King Corporation |
Director Nominees’ Skills, Backgrounds and Expertise
Current Public Company Directorships:
Director Nominees’ Skills, Backgrounds and Expertise
| • | Eli Lilly and Company |
Director Nominees’ Skills, Backgrounds and Expertise
| • | First Watch Restaurant Group, Inc. |
Director Nominees’ Skills, Backgrounds and Expertise
| • | Traeger, Inc. |
Director Nominees’ Skills, Backgrounds and Expertise
Previous Public Company Boards:
Director Nominees’ Skills, Backgrounds and Expertise
| • | Dunkin’ Brands Group, Inc. (2012–2020) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Mr. Alvarez brings to the Lowe’s Board more than 40 years of experience in the retail industry, as well as extensive executive leadership experience in managing some of the world’s best known brands. As a senior executive of the leading global foodservice retailer and other global restaurant businesses, Mr. Alvarez developed in-depth knowledge of consumer marketing, brand management and strategic planning. Mr. Alvarez also brings extensive corporate governance experience through his service as a director on other public and private company boards. Additionally, Mr. Alvarez is an experienced people leader and provides valuable perspectives on talent development topics.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | DAVID H. BATCHELDER | | | Independent Director Since: 2018 Age: 74 Lowe’s Board Committees: • Compensation • Nominating and Governance |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 1996–2015 Co-Founder, Principal and member of the Investment Committee at Relational Investors LLC, a firm that managed over $6.5 billion for some of the largest pension funds in the world |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 1988–2005 Principal of Relational Advisors LLC, a financial advisory and investment banking firm |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Prior to 1988 Variety of executive positions at Mesa Petroleum Company, including Chief Financial Officer and President and Chief Operating Officer, and employment as an Audit Manager with Deloitte & Touche LLP |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Mr. Batchelder’s experience as a board member of several public and private companies in a wide variety of industries, including retail, provides him with valuable perspectives on corporate governance and board dynamics. In addition, his experience from Relational Investors provides our Board valuable insights into the views of institutional investors and perspectives on Company performance and opportunities. He brings to the Board over 30 years of financial management and mergers and acquisitions experience. In addition, having served in a number of senior executive positions at Mesa, Mr. Batchelder contributes to the operational management and strategic business development skills of our Board.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | SCOTT H. BAXTER | | | Independent Director Since: 2022 Age: 59 Lowe’s Board Committees: • Compensation • Technology |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | August 2021–present President, Chief Executive Officer and Chair of the Board of Kontoor Brands, Inc., a global lifestyle apparel company |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | August 2018–August 2021 President and Chief Executive Officer of Kontoor following announcement by VF Corporation, one of the world’s largest apparel, footwear and accessories companies, of its intention to separate its jeanswear organization into an independent, publicly traded company |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | January 2018–August 2018 Group President, Americas West at VF Corporation |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2007–2017 Variety of leadership positions at VF Corporation, including Group President, Outdoor & Action Sports, Americas; Vice President, VF Corporation & Group President, Jeanswear, Imagewear and South America; and President of the Licensed Sports Group |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Prior to 2007 Senior Vice President, Services division at The Home Depot, Inc. and leadership roles at Edward Don & Company, PepsiCo and Nestle |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Current Public Company Directorships:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Kontoor Brands, Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Previous Public Company Boards:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Topgolf Callaway Brands Corp. (2019–2023) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Mr. Baxter brings to the Lowe’s Board extensive executive leadership experience in the retail industry, as well as expertise in marketing and brand management and developing digital growth strategies in support of an omnichannel customer experience. Mr. Baxter also has a strong background in a number of other critical areas, including operations, merchandising and sourcing, sales and strategic planning. Mr. Baxter is skilled in human capital matters and brings to the Board valuable insights on talent management and development.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | SANDRA B. COCHRAN | | | Independent Director Since: 2016 Age: 65 Lowe’s Board Committees: • Audit • Sustainability, Chair |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | November 2023–February 2024 Executive Chair of Cracker Barrel Old Country Store, Inc., a restaurant and retail concept with locations throughout the United States |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2011–October 2023 President and Chief Executive Officer of Cracker Barrel |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2010–2011 President and Chief Operating Officer of Cracker Barrel |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2009–2010 Executive Vice President and Chief Financial Officer of Cracker Barrel |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2004–2009 Chief Executive Officer of Books-A-Million, Inc., a book retailer in the southeast United States |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 1992–2004 Variety of leadership positions at Books-A-Million, including President, Chief Financial Officer and Vice President of Finance |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Current Public Company Directorships:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Signet Jewelers Limited |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Previous Public Company Boards:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Cracker Barrel Old Country Store, Inc. (2011–2024) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Dollar General Corporation (2012–2020) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Ms. Cochran brings to Lowe’s Board more than 30 years of retail experience as well as expertise in a number of critical areas, including marketing, risk management and strategic planning. Ms. Cochran also has significant executive-level financial experience, which she developed while serving in multiple leadership finance positions, including Chief Financial Officer of both Cracker Barrel Old Country Store, Inc. and Books-A-Million, Inc. Her financial expertise will continue to be an asset as the Company continues to develop its capabilities as an omnichannel home improvement retailer.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | LAURIE Z. DOUGLAS | | | Independent Director Since: 2015 Age: 60 Lowe’s Board Committees: • Audit • Nominating and Governance • Technology, Chair |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2019–Present Senior Vice President, Chief Information Officer and Chief Digital Officer of Publix Super Markets, Inc., an operator of retail food and pharmacy in the southeast United States |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2006–2018 Senior Vice President, Chief Information Officer and Chief Security Officer of Publix Super Markets |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2004–2005 Senior Vice President and Chief Information Officer of FedEx Kinko’s Office and Print Services, Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2003–2004 Senior Vice President and Chief Information Officer of Kinko’s, Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Ms. Douglas brings to Lowe’s Board many years of setting the enterprise technology, digital and security visions and driving the related implementations for two Fortune 500 companies. Ms. Douglas’ expertise spans broad IT disciplines, including application development and infrastructure, digital and mobile, omnichannel, cybersecurity, data protection and regulatory compliance. Ms. Douglas is a highly respected technology leader focused on driving shareholder value with technology solutions that foster premier customer service, operational excellence and profitable growth and has financial management responsibility for IT investments. Ms. Douglas also has relevant experience with emerging technologies to ensure ongoing relevance as technology changes at an unprecedented rate. Additionally, Ms. Douglas is skilled in the area of human capital management, having been responsible for the hiring, training and retention of technology and digital teams.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | RICHARD W. DREILING | | | Lead Independent Director Independent Director Since: 2012 Age: 70 Lowe’s Board Committees: • Nominating and Governance |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | January 2023–Present Chairman and Chief Executive Officer of Dollar Tree, Inc., a leading operator of discount variety stores |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | March 2022–January 2023 Executive Chairman of Dollar Tree |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2015–2016 Chairman of Dollar General Corporation, one of the nation’s largest discount retailers |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2008–2015 Chief Executive Officer and Chairman of Dollar General |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2007–2008 President, Chief Executive Officer and Chairman of Duane Reade Holdings, Inc. and Duane Reade Inc., an operator of a chain of retail drug stores in New York City |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2005–2007 President and Chief Executive Officer of Duane Reade Holdings, Inc. and Duane Reade Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Prior to 2005 Variety of senior leadership positions at Longs Drug Stores Corporation, Safeway, Inc. and Vons Co Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Current Public Company Directorships:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Dollar Tree, Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Previous Public Company Boards:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Kellogg Company (2016–2023) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | PulteGroup, Inc. (2015–2022) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Aramark Corporation (2016–2022) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Mr. Dreiling brings to Lowe’s Board more than 50 years of retail industry experience at all operating levels and a unique perspective as a result of his experience progressing through the ranks within various retail companies. Over the course of his career, Mr. Dreiling has developed deep insight into all key areas of a retail business as a result of his experience overseeing the operations, marketing, manufacturing and distribution functions of a number of retail companies. Mr. Dreiling also has strong business development expertise in expanding the footprint and offerings provided by several retailers into new regions.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | MARVIN R. ELLISON | | | Chairman of the Board Director Since: 2018 Age: 59 |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | May 2021–Present Chairman, President and Chief Executive Officer of Lowe’s |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2018–May 2021 President and Chief Executive Officer of Lowe’s |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2016–2018 Chairman of the Board and Chief Executive Officer of J. C. Penney Company, Inc., a department store retailer |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2015–2016 Chief Executive Officer of J. C. Penney Company |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2014–2015 President of J. C. Penney Company |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2002–2014 Variety of leadership positions at The Home Depot Inc., a home improvement retailer, including Executive Vice President–U.S. Stores; President–Northern Division; Senior Vice President–Logistics; Vice President–Logistics; and Vice President–Loss Prevention |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 1987–2002 Variety of operational roles with Target Corporation |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Current Public Company Directorships:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | FedEx Corporation |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Mr. Ellison has more than 35 years of leadership and operational experience in the retail industry, including expertise in managing a large network of stores and employees as well as global logistics networks. He brings extensive experience in the home improvement industry, having spent 12 years in senior-level operations roles with The Home Depot, where he oversaw U.S. sales, operations, installation services, tool rental and Pro strategic initiatives, and improved customer service and efficiency across the organization to serve both DIY and Pro customers.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | NAVDEEP GUPTA | | | New Director Nominee Age: 51 |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2021–Present Executive Vice President, Chief Financial Officer of DICK’S Sporting Goods, Inc., a leading omnichannel sporting goods retailer |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2017–2021 Senior Vice President, Chief Accounting Officer of DICK’S |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2006–2017 Variety of senior leadership positions at Advance Auto Parts, Inc., a leading retailer of automotive replacement parts and accessories, including Senior Vice President, Finance; Chief Audit Executive; and Vice President, Finance and Treasurer |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2003–2006 Management roles at Sprint Nextel Corporation |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 1993–2000 Lieutenant in the Indian Navy |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Mr. Gupta brings extensive retail finance and management experience to the Lowe’s Board. Over the course of his career, Mr. Gupta has developed deep insight into the complex financial and strategic issues facing large public retail companies, and he provides valuable perspectives in the areas of risk management, business development and accounting. In his role as Chief Financial Officer at DICK’S, Mr. Gupta also oversees GameChanger, a live streaming, scoring and statistic mobile app for youth sports, and brings to the Lowe’s Board experience in digital platforms and technology.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | BRIAN C. ROGERS | | | Independent Director Since: 2018 Age: 68 Lowe’s Board Committees: • Audit • Nominating and Governance, Chair |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2017–2019 Non-Executive Chairman of T. Rowe Price Group, Inc., a global investment management organization |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2007–2017 Chairman of T. Rowe Price Group |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2004–2017 Chief Investment Officer of T. Rowe Price Group |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 1982–2004 Variety of senior leadership positions at T. Rowe Price Group |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Prior to 1982 Employed at Bankers Trust Company |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Current Public Company Directorships:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | RTX Corporation |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Previous Public Company Boards:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | T. Rowe Price Group, Inc. (1997–2019) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Through his extensive investment and management roles, including Chief Investment Officer of a large investment management firm, Mr. Rogers provides the Board with financial, investment and risk management expertise. In addition, Mr. Rogers’ experience at T. Rowe Price, including as portfolio manager of one of the firm’s largest funds, The T. Rowe Price Equity Income Fund, from its inception until 2015, provides our Board valuable insights into the views of institutional investors and perspectives on Company performance and opportunities.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | BERTRAM L. SCOTT | | | Independent Director Since: 2015 Age: 73 Lowe’s Board Committees: • Audit, Chair • Nominating and Governance |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2015–2019 Senior Vice President of Population Health and Value Based Care at Novant Health, a leading healthcare provider |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2012–2014 President and Chief Executive Officer of Affinity Health Plan, a provider of New York State-sponsored health coverage |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2010–2011 President, U.S. Commercial of CIGNA Corporation, a global health services organization |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2000–2010 Executive Vice President and Chief Institutional Development and Sales Officer of TIAA-CREF |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2000–2007 President and Chief Executive Officer of TIAA-CREF Life Insurance Company |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Current Public Company Directorships:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Becton, Dickinson and Company |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Dollar Tree, Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Equitable Holdings, Inc. and certain wholly-owned subsidiaries |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Previous Public Company Boards:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | AllianceBernstein Holding L.P (2020–2022) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Mr. Scott has served in a variety of senior leadership positions in organizations that are in highly regulated industries and brings valuable experience to Lowe’s Board in the areas of development and implementation of strategy, mergers and acquisitions and integration. Mr. Scott also brings significant experience and responsibility in the areas of sales and marketing in his roles as Executive Vice President and Chief Institutional Development and Sales Officer of TIAA-CREF and President and Chief Executive Officer of TIAA-CREF Life Insurance Company.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | LAWRENCE SIMKINS | | | New Director Nominee Age: 62 |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2001–2022 President and Chief Executive Officer of The Washington Companies, a group of privately owned companies and select public company investments in the sectors of rail and marine transportation, shipyards, mining, environmental construction, heavy equipment sales and aviation products |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 1988–2001 Variety of senior leadership roles at The Washington Companies, including Executive Vice President; President of Westran, Inc., a long haul trucking company; Controller of Washington Construction, an engineering and construction services company; Vice President of Envirocon, Inc., an environmental remediation company; and Internal Auditor of The Washington Companies |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 1985–1988 Bank Examiner at the Federal Reserve Bank of Minneapolis |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Previous Public Company Boards:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Atlas Corp. (2019–2023) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Seaspan Corporation (2017–2020) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Mr. Simkins has more than 30 years of leadership and operational management experience. As Chief Executive Officer of The Washington Companies, Mr. Simkins led multiple operating companies in a variety of sectors and provides in-depth knowledge into the key areas of strategic business development, safety, supply chain management and mergers and acquisitions. In addition to extensive finance and accounting expertise, he brings valuable perspectives on corporate governance through his past service as a member of the board of each individual Washington company where he provided enterprise-wide leadership and strategic direction.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | COLLEEN TAYLOR | | | Independent Director Since: 2022 Age: 56 Lowe’s Board Committees: • Audit • Sustainability |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2020–Present President, U.S. Merchant Services at American Express Company, a diversified financial services company |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2019–2020 Executive Vice President, Merchant Services at Wells Fargo & Company, a banking and financial services company |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2017–2019 Executive Vice President, New Payments at Mastercard Incorporated, a technology company in the global payments industry |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2009–2017 Variety of leadership positions at Capital One Financial Corporation, a diversified financial services holding company, including Executive Vice President, Head of Treasury Management, Merchant Services and Enterprise Payments |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Previous Public Company Boards:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Bill.com Holdings, Inc. (2020–2022) |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Ms. Taylor brings to the Lowe’s Board many years of senior leadership experience in the highly-regulated financial services industry with expertise in banking, merchant services and payments, as well as a strong background in a number of other critical areas, including risk management, strategic planning, mergers and acquisitions and brand management. As an experienced payments executive, Ms. Taylor has been the accountable executive for technology and e-commerce capabilities delivered to some of the world’s largest merchants, acquirers and processors. In her roles, Ms. Taylor has been responsible for technology risk management, the development of complex enterprise technology roadmaps and cybersecurity oversight. Additionally, Ms. Taylor is a highly experienced people leader and has led large global sales, product management and operations teams.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| | MARY BETH WEST | | | Independent Director Since: 2021 Age: 61 Lowe’s Board Committees: • Audit • Sustainability |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Career Highlights:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2017–2020 Senior Vice President, Chief Growth Officer of The Hershey Company, a global confectionary manufacturer and marketer |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2015–2017 Executive Vice President, Chief Customer and Marketing Officer of J. C. Penney Company, Inc., a department store retailer |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2012–2014 Executive Vice President, Chief Category and Marketing Officer of Mondelez International, Inc., one of the world’s largest snack companies |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 2007–2012 Chief Marketing Officer of Kraft Foods, Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | 1986–2007 Variety of other general management and marketing roles at Kraft Foods, Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Current Public Company Directorships:
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Albertsons Companies, Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
| • | Hasbro, Inc. |
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s Ms. West brings to the Lowe’s Board extensive executive leadership experience in marketing and building some of the world’s most iconic brands. Ms. West has a strong background in developing compelling retail and sales experiences and managing large teams and possesses expertise in a number of critical areas, including strategic and operational planning and execution. In addition, Ms. West brings deep experience in developing growth strategies for complex consumer-brand and retail organizations using insights, analytics, innovation and research and development.
Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
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Specific Experience, Qualifications, Attributes and Skills Relevant to Lowe’s
CORPORATE GOVERNANCE GUIDELINES AND CODE OF BUSINESS CONDUCT AND ETHICS
Corporate Governance
Corporate Governance CORPORATE GOVERNANCE GUIDELINES AND CODE OF BUSINESS CONDUCT AND ETHICS The Board has adopted Corporate Governance Guidelines setting forth guidelines and standards with respect to the role and composition of the Board, the functioning of the Board and its committees, the compensation of directors, succession planning and management development, the Board’s and its committees’ access to independent advisors and other matters. The Nominating and Governance Committee of the Board regularly reviews and assesses corporate governance developments and recommends to the Board modifications to the Corporate Governance Guidelines as warranted. The Company has also adopted a Code of Business Conduct and Ethics for its directors, officers and associates. The Corporate Governance Guidelines and the Code of Business Conduct and Ethics are posted on the Company’s website at ir.lowes.com. DIRECTOR INDEPENDENCE
12 of 13 Director Nominees are Independent
12 of 13 Director Nominees are Independent
Independent Directors
Independent Directors The Company’s Corporate Governance Guidelines provide that, in accordance with Lowe’s long-standing policy and the applicable rules of the New York Stock Exchange (the “NYSE”), a substantial majority of the members of the Board must qualify as independent directors. The rules and regulations of the NYSE (the “NYSE rules”) provide that a director does not qualify as “independent” unless the board of directors affirmatively determines that the director has no material relationship with the Company (either directly or as a partner, shareholder or officer of an organization that has a relationship with the Company). The NYSE rules recommend that a board of directors consider all of the relevant facts and circumstances in determining the materiality of a director’s relationship with a company. The Board has adopted Categorical Standards for Determination of Director Independence (the “Categorical Standards”), which incorporate the independence standards of the NYSE rules, to assist the Board in determining whether a particular relationship a director has with the Company is a material relationship that would impair the director’s independence. The Categorical Standards establish thresholds at which directors’ relationships with the Company are deemed to be not material and, therefore, shall not disqualify any director or director nominee from being considered “independent.” A copy of the Categorical Standards is attached as Appendix B to this Proxy Statement. The Board, with the assistance of the Nominating and Governance Committee, conducted an evaluation of director independence based on the Categorical Standards, NYSE rules and SEC rules and regulations (the “SEC rules”). The Board considered all relevant transactions, relationships or arrangements between each director or director nominee (and such individual’s immediate family members and affiliates) and each of Lowe’s, its management and its independent registered public accounting firm in each of the most recent three completed fiscal years. In determining the independence of each director or director nominee, the Board considered and deemed immaterial to such individual’s independence transactions involving the purchase or sale of products and services in the ordinary course of business between the Company, on the one hand, and, on the other, companies or organizations at which some of our directors or their immediate family members were officers, employees or directors in each of the most recent three completed fiscal years. In each case, the amount paid to or received from these companies or organizations was well below 2% of total revenue of such companies or organizations and consequently below the threshold set forth in our Categorical Standards. For Mr. Scott, the Board considered that his son recently commenced employment with the Company in a non-officer and non-strategic position in February 2024, and is not expected to receive greater than $120,000 in annual compensation. In addition, the Board considered the amount of any discretionary charitable contributions made by the Company in each of the most recent three completed fiscal years to charitable organizations where a director, a director nominee or a member of such individual’s immediate family serves as a director or trustee. The Company has not made payments to any such organization in any of the last three fiscal years exceeding $120,000, except for a $125,000 donation in each of fiscal 2022 and 2023 to the American Heart Association where Mr. Scott is a director and was the immediate past chairman in 2022. As a result of the evaluation of the transactions, relationships or arrangements that do exist or did exist within the most recent three completed fiscal years (except for Mr. Ellison’s), the Board determined that they all fall well below the thresholds in the Categorical Standards. Consequently, the Board determined that
Compensation Philosophy
Compensation Philosophy The Compensation Committee reviews director compensation annually with the advice of its independent compensation consultant and recommends changes to the Board for approval. The Compensation Committee assesses director compensation to align with Board and committee requirements and for market competitiveness against the Company’s Peer Group as described in the “Compensation Market Data and Peer Group” section of this Proxy Statement and other large general industry companies. When reviewing director compensation for fiscal 2023, the Compensation Committee’s independent compensation consultant advised that director pay levels were aligned with the median of the Company’s Peer Group. Lowe’s philosophy on compensating directors who are not employees (“non-employee directors”) is to use a mix of cash and equity that will align the interests of our directors with the long-term interests of Lowe’s shareholders and compensate our directors fairly and competitively for the obligations and responsibilities of serving as a director at a company of Lowe’s size and scope. To implement this philosophy, we target a split of one-third cash and two-thirds equity, with total target compensation at the median of the market. A director who is an employee of the Company receives no additional compensation for his or her services as a director. A non-employee director receives compensation for his or her services as described in the following paragraphs. All directors are reimbursed for reasonable expenses incurred in connection with attendance at Board and committee meetings, conducting store visits and fulfilling other activities in their role as directors.
Fiscal 2023 Compensation
| Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($)(2) | Total ($) | | Raul Alvarez | 120,000 | 206,520 | | 326,520 | | David H. Batchelder | 100,000 | 206,520 | 200,000 | 506,520 | | Scott H. Baxter | 100,000 | 206,520 | | 306,520 | | Sandra B. Cochran | 120,000 | 206,520 | | 326,520 | | Laurie Z. Douglas | 120,000 | 206,520 | | 326,520 | | Richard W. Dreiling | 200,000 | 206,520 | | 406,520 | | Daniel J. Heinrich(3) | 100,000 | 206,520(3) | | 306,520 | | Brian C. Rogers | 120,000 | 206,520 | 100,000 | 426,520 | | Bertram L. Scott | 125,000 | 206,520 | | 331,520 | | Colleen Taylor | 100,000 | 206,520 | | 306,520 | | Mary Beth West | 100,000 | 206,520 | | 306,520 |
ROLES AND RESPONSIBILITIES OF THE LEAD INDEPENDENT DIRECTOR
| • | Coordinates, with the Nominating and Governance Committee, the annual performance evaluation of the Chairman/CEO, the Board and each of its Committees and individual directors; and |
Compensation Committee Advisors
Compensation Committee Advisors The Compensation Committee has sole authority under its charter to retain compensation consultants and other advisors and to approve such consultants’ and advisors’ fees and retention terms. In 2023, Semler Brossy Consulting Group, LLC acted as the independent compensation consultant and provided the Compensation Committee with advice and support on executive and non-employee director compensation matters. The compensation consultant assists with peer group identification and benchmarking, design of the Company’s executive compensation program and conduct of an annual risk assessment related thereto, review of compensation-related disclosures and related services. A more detailed description of the services performed by the Compensation Committee’s compensation consultant in fiscal 2023 is included in the “Compensation Discussion and Analysis” section of this Proxy Statement. The Compensation Committee has reviewed and confirmed the independence of its compensation consultant. Neither the compensation consultant nor any of its affiliates provide any services to the Company except for services provided to the Compensation Committee.
Fiscal 2023 Financial Highlights** and Incentive Program Outcomes
Fiscal 2023 Financial Highlights** and Incentive Program Outcomes In fiscal 2023, we delivered solid financial performance despite a challenging macroeconomic backdrop – with total sales of more than $86 billion, diluted EPS of $13.20 and adjusted diluted EPS* of $13.09. Despite lower sales, we grew operating margin to 13.4% and adjusted operating margin* to 13.3% through our disciplined cost management and focus on our productivity initiatives. We also delivered growth in Pro and online, two of our key growth drivers within our Total Home strategy. We continue to invest in supply chain, technology and omnichannel capabilities to put us in a strong position to take share when the home improvement market recovers.
Fiscal 2023 Financial Highlights** and Incentive Program Outcomes
| * ROIC is calculated using a non-GAAP financial measure, and adjusted diluted EPS and adjusted operating margin are non-GAAP financial measures. Refer to Appendix A for the calculation of ROIC and a reconciliation of non-GAAP measures. |
Fiscal 2023 Financial Highlights** and Incentive Program Outcomes
| ** Fiscal 2023 was a 52-week fiscal year, compared to fiscal 2022, which included an additional week. Fiscal 2022 sales included approximately $1.4 billion due to the 53rd week in the prior year, as well as $5.0 billion generated by our Canadian retail business, which was sold at the end of fiscal 2022. |
Fiscal 2023 Financial Highlights** and Incentive Program Outcomes
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Fiscal 2023 Financial Highlights** and Incentive Program Outcomes
We expected a slight decline in the home improvement market in 2023 and comparable sales in a range of flat to down 2% due to the macroeconomic environment. Our incentive goals were set based on that expectation and aligned with our financial guidance provided to investors at the beginning of the fiscal year. However, given the sharper than expected pullback in DIY demand across the home improvement industry, our overall financial performance relative to the goals established at the beginning of the fiscal year was below our expectations. That outcome is reflected in our annual incentive awards paying out between threshold and target at 62.97% of target, as described in more detail below. Our ROIC* has more than tripled over the last five years from 11.2% in 2018 to 36.4% in 2023. Our multi-year improvement in ROIC and our outperformance on relative TSR compared to peers and the S&P 500 is reflected in the payout of our performance share unit awards for 2021 to 2023. Our average adjusted ROIC of 36.7% for the three-year period ending in 2023 exceeded our maximum performance goal of 33.0% set at the beginning of the period. Additionally, our TSR exceeded the median of the companies in the S&P 500 Index by 13.4%. These long-term results are reflected in the 183.06% of target payout of our performance share unit awards. Overall, we believe our incentive programs are aligned with important inputs to shareholder value creation and these incentive outcomes reflect our strong commitment to aligning pay and short and long-term performance within our executive compensation programs.
Compensation Philosophy and Objectives
| • | Maximize long-term shareholder value through alignment of executive and shareholder interests; |
2023 Executive Compensation
2023 Executive Compensation We have a long-standing commitment to pay for performance and provide a significant portion of compensation opportunities through variable pay arrangements. These arrangements are designed to hold our executive officers accountable for business results and reward them for consistently strong financial performance and the creation of value for our shareholders. To align pay with performance, our incentive compensation programs use objective pre-established performance measures: sales, operating income, inventory turnover and Pro sales growth for our annual incentive plan and ROIC, along with a relative TSR modifier, for our performance share units. We believe these financial metrics are important inputs to sustained shareholder value creation. Each of these performance measures is further described beginning on page 39. Our 2023 executive compensation program consisted of the following elements:
2023 Executive Compensation
| • | Annual incentive awards |
2023 Executive Compensation
| • | Long-term equity awards granted in the form of: |
2023 Executive Compensation
| • Performance share unit awards (“PSUs”) • Stock options • Restricted stock awards (“RSAs”) |
2023 Executive Compensation
| • | Retirement, health and severance benefits |
How Our Executive Compensation is Tied to Performance
| • | Annual Incentive Awards: Payout is based on the Company’s achievement of financial (sales and operating income) and strategic (inventory turnover and Pro sales growth) goals. Threshold performance objectives must be achieved for any payout to be earned. |
How Our Executive Compensation is Tied to Performance
| • | PSUs: Payout is based on the Company’s achievement of (i) a three-year average ROIC goal and (ii) a relative TSR modifier, which compares the Company’s TSR to the median TSR of companies listed in the S&P 500 Index over a three-year period. Threshold performance objectives must be achieved for any awards to be earned. |
How Our Executive Compensation is Tied to Performance
| • | Stock Options: Realized value for stock option awards is based on the increase in the market value of our common stock relative to the value when the award was granted. |
How Our Executive Compensation is Tied to Performance
| • | Annual incentive payouts were determined based on actual performance between threshold and target in sales, operating income (as adjusted), inventory turnover and Pro sales growth. Overall award payouts for the NEOs were at 62.97% of target. |
How Our Executive Compensation is Tied to Performance
| • | PSUs for the 2021-2023 performance period paid out at 183.06% based on above maximum adjusted ROIC and above median relative TSR. |
Committed to Strong Compensation Governance Practices
| | WHAT WE DO | | WHAT WE DON’T DO | | | Target the majority of NEO compensation to be performance-based, at-risk and long-term oriented | | Provide single-trigger severance payments or vesting or tax gross-ups following change-in-control | | | Assess the design and alignment of our incentive plans in relation to performance goals, business strategy, organizational priorities and shareholder interests on an annual basis | | Permit hedging, pledging or unauthorized trading of the Company’s securities by our executives or directors | | | Assess compensation-related risks associated with regulatory, shareholder and market changes on an annual basis | | Grant discounted stock options, extend the original option term, reprice or exchange underwater options without shareholder approval | | | Assess peer group composition, financial and stock price performance and competitive compensation practices on an annual basis | | Provide an evergreen provision in our long-term incentive plan | | | Use different metrics in annual and long-term incentive plans | | Provide employment agreements to executives | | | Maintain a fully independent Compensation Committee, which retains an independent compensation consultant | | Provide excessive perquisites | | | Maintain robust clawback policies applicable to cash and equity incentive-based compensation of senior executives if there is a financial restatement or if senior executives engage in misconduct | | | | | Limit incentive payouts as a percentage of target awards | | | | | Require significant stock ownership by all senior executives | | |
Annual Say-on-Pay Vote and Shareholder Engagement
Annual Say-on-Pay Vote and Shareholder Engagement The Board and the Compensation Committee carefully consider the results of our shareholders’ annual advisory “say-on-pay” vote. Our shareholders continue to express strong support for the Company’s executive compensation program with the Company receiving 92% advisory approval in 2023. This is consistent with the level of shareholder support received over the past 10 years. In consideration of this continued support and its belief that the program continues to promote our strategy and drive performance, the Compensation Committee maintained the principal features and performance-based elements of the executive compensation program for 2023. At the Annual Meeting, the Company’s shareholders will again have the opportunity to approve our executive compensation program through the advisory say-on-pay vote included as Proposal 2 in this Proxy Statement. As discussed in the “Proxy Summary” section of this Proxy Statement, we regularly engage with our institutional shareholders to understand the issues that matter most to them. During meetings we held since the beginning of 2023, we discussed key corporate governance, sustainability and human capital management topics and shared our thoughts on the Compensation Committee’s approach to setting executive compensation. Overall, with respect to our compensation program, we received generally positive feedback on its structure, evolution and responsiveness, including the metrics in our annual and long-term incentive plans and their tie to Company strategy and alignment with shareholder value creation. II. COMPENSATION ELEMENTS To support our compensation philosophy and objectives, the Compensation Committee has designed the executive compensation program with an appropriate balance between both annual and long-term compensation, as well as between fixed and at-risk pay. The largest portion of our executive compensation program is based upon achieving the Company’s financial and strategic performance objectives and contingent on achievement of challenging performance hurdles. The Board places significant emphasis on the long-term success of the Company and strong alignment with the interests of our shareholders, customers, associates and the communities in which we operate. Accordingly, long-term incentive award opportunities, as a percentage of total compensation, are significantly greater than annual incentive award opportunities.
Annual Say-on-Pay Vote and Shareholder Engagement
The following table lists the key elements of the Company’s 2023 executive compensation program: Note: Compensation mix shown in the preceding table reflects annualized target CEO compensation. The average annualized compensation mix for our other NEOs is as follows: base salary (16%), annual incentive awards (16%) and long-term incentive awards (68%) with the same award mix of PSUs, stock options and RSAs as shown above.
Annual Say-on-Pay Vote and Shareholder Engagement
| (2) ROIC is a comprehensive long-term financial metric that incorporates both operating profit and balance sheet performance in the calculation. This metric motivates management to generate sustained profitable growth over time while balancing the Company’s effectiveness at allocating capital to drive future investment and growth. ROIC is computed by dividing the Company’s lease adjusted net operating profit after taxes for the year by the average of the Company’s invested capital as of the beginning and end of the fiscal year. “Invested capital” for these purposes means the average of current year and prior year ending debt and shareholders’ (deficit)/equity. See Appendix A for our fiscal 2023 ROIC calculation. The return percentages for each fiscal year in the performance period are averaged to yield a ROIC measure for the three-year performance period. |
Annual Say-on-Pay Vote and Shareholder Engagement
We also provide broad-based financial and health and welfare benefits on the same terms and conditions applicable to all eligible associates, including a 401(k) Plan with Company match, a non-qualified deferred compensation plan and 401(k) benefit restoration plan with Company match, comprehensive group health insurance, voluntary life, disability and accident benefits, a discounted employee stock purchase plan and other benefits, such as reimbursement of costs associated with tax and financial planning, an annual physical examination, individual disability insurance and limited personal use of corporate aircraft, each of which are designed to enhance productivity and encourage the attraction and retention of top talent. Additionally, we maintain a severance plan for senior officers, which provides for severance payments, the continuation of health care benefits and Company-paid outplacement services in the event of a termination of employment with the Company under qualifying circumstances.
Role of the Compensation Committee
| • | Annual and long-term incentive metrics and performance goals; |
Role of the Compensation Committee
| • | Achievement of goals in annual and long-term incentive plans; |
Role of the Compensation Committee
| • | Peer groups of companies used for assessing market compensation levels, pay practices and performance; and |
Role of the Independent Compensation Consultant
Role of the Independent Compensation Consultant The Compensation Committee directly engages and regularly consults with Semler Brossy Consulting Group, LLC, its independent compensation consultant for ongoing executive compensation matters. The Compensation Committee’s compensation consultant reports directly to the Compensation Committee and does not provide any services to the Company other than the consulting services for the Compensation Committee. The Compensation Committee has assessed the independence of its compensation consultant pursuant to the independence factors specified by applicable SEC rules (as incorporated into the NYSE listing standards) and concluded that no conflict of interest exists that would prevent its compensation consultant from independently representing the Compensation Committee. During the 2023 fiscal year, Semler Brossy Consulting Group, LLC performed the following services:
Role of the Independent Compensation Consultant
| • | Attended all Compensation Committee meetings; |
Role of the Independent Compensation Consultant
| • | Advised the Compensation Committee on the design of the Company’s annual and long-term incentive plans (including the selection of the performance metrics and assessment of performance goals); |
Role of the Independent Compensation Consultant
| • | Provided the Compensation Committee with an external perspective on the reasonableness and competitiveness of our executive compensation program; |
Role of the Independent Compensation Consultant
| • | Reviewed the selection of the peer groups of companies used for assessing market compensation levels, pay practices and performance; |
Role of the Independent Compensation Consultant
| • | Provided periodic updates and guidance on regulatory and governance trends impacting compensation; |
Role of the Independent Compensation Consultant
| • | Assessed the alignment of CEO compensation with Company performance; |
Role of the Independent Compensation Consultant
| • | Advised on compensation packages provided to new executive hires and for promotions, as relevant; |
Role of the Independent Compensation Consultant
| • | Assisted the Compensation Committee in conducting its annual risk assessment of our executive compensation programs; and |
Role of the Independent Compensation Consultant
| • | Reviewed and discussed compensation-related proxy statement disclosures. |
Compensation Market Data and Peer Group
Compensation Market Data and Peer Group Each year, the Compensation Committee reviews the peer group companies used to assess compensation and performance with the advice of the independent compensation consultant. The Compensation Committee considered data from two sources for fiscal 2023: the Peer Group and the Survey Group. The Peer Group is comprised of retail and customer service companies selected for direct relevance to Lowe’s business using the following criteria:
Compensation Market Data and Peer Group
| • | Headquartered in the United States with publicly-traded securities listed on a major U.S. exchange; |
Compensation Market Data and Peer Group
| • | Operating in the Consumer Discretionary or Food & Staples retail sectors; |
Compensation Market Data and Peer Group
| • | Annual revenue greater than approximately $20 billion; and |
Compensation Market Data and Peer Group
| • | Retail or customer service-based business model. |
Compensation Market Data and Peer Group
The companies in the Peer Group for fiscal 2023 were:
Compensation Market Data and Peer Group
| Best Buy Co., Inc. | Costco Wholesale Corporation | CVS Health Corporation | | Dollar General Corporation | Macy’s, Inc. | NIKE, Inc. | | Starbucks Corporation | Target Corporation | The Home Depot, Inc. | | The Kroger Co. | The TJX Companies, Inc | Walgreens Boots Alliance, Inc. | | | Walmart, Inc. | |
Compensation Market Data and Peer Group
For fiscal 2023, Kohl’s Corporation and Nordstrom, Inc. were removed from the Peer Group due to revenues not meeting our selection criteria, and Dollar General Corporation was added to the Peer Group due to strong alignment with our revenue and other selection criteria. Peer Group compensation data is obtained from publicly available proxy statements.
Compensation Market Data and Peer Group
| PEER GROUP DATA FOR FISCAL 2023(1) | | | | | | | | | | | | TSR | | | | | Revenues ($ in millions) | Market Capitalization ($ in millions) | Operating Income ($ in millions) | 1-year | 3-year | 5-year | | 75th Percentile | $157,403 | $152,588 | $8,505 | 10.8% | 41.9% | 113.5% | | 50th Percentile | $109,120 | $94,059 | $4,851 | -11.9% | 10.7% | 54.1% | | 25th Percentile | $46,298 | $29,887 | $3,330 | -20.1% | -21.6% | 29.6% | | Lowe’s Companies, Inc. | $97,059 | $126,231 | $10,159 | 3.8% | 39.0% | 147.4% | | Percentile Ranking | 48.2% | 69.7% | 76.9% | 65.2% | 71.4% | 92.7% |
Compensation Market Data and Peer Group
Source: S&P Capital IQ
Compensation Market Data and Peer Group
| (1) Revenues and operating income are as of each company’s latest reported fiscal year as of February 2, 2024, which for Lowe’s is fiscal 2022. Market capitalization and TSR are as of February 2, 2024, which aligns with Lowe’s fiscal year end date. |
Compensation Market Data and Peer Group
The Survey Group is comprised of the Peer Group (other than Costco Wholesale Corporation) and other retail companies that we compete with for executive talent, generally with over $10 billion in annual revenue, and participate in a proprietary survey conducted by Korn Ferry. The Compensation Committee uses a wider range of revenue in the Survey Group to provide for a robust sample of market data for compensation benchmarking. At its January 2023 meeting, the Compensation Committee reviewed detailed compensation benchmarks based on the two groups described above. Given differences in role, experience, performance and other challenges directly comparing NEO roles other than the CEO across companies, these benchmarks served as a reference point, rather than a formula-driven outcome, in determining adjustments to target total compensation levels for the NEOs.
Compensation Market Data and Peer Group
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Compensation Market Data and Peer Group
IV. 2023 COMPENSATION ACTIONS
Annual Incentive Awards
Annual Incentive Awards Our annual incentive plan provides each NEO the opportunity to receive an annual cash award based on the Company’s achievement of pre-determined financial and strategic performance goals. The formula for computing annual incentive payouts is as follows:
Annual Incentive Awards
| BASE SALARY | TARGET AWARD PERCENTAGE (% of Base Salary) | PERFORMANCE GOAL ACHIEVEMENT LEVEL (% of Target Level) | | | | Base salary eligible earnings in fiscal year 2023 with 2022 and 2023 base salaries pro-rated for the number of days in the fiscal year prior to and following the March 2023 effective date for 2023 base salary adjustmentsX | • 200% of base salary for the CEO • 100% of base salary for other NEOsX | • Threshold percentage for all NEOs was 25% of target • Maximum opportunity of 200% of target for all performance metrics | = | ANNUAL INCENTIVE AWARD EARNED |
Annual Incentive Awards
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Annual Incentive Awards
The following table describes the financial and strategic goals for the 2023 annual incentive awards and the weighting assigned to each goal, which are the same for all of the NEOs:
Annual Incentive Awards
| | Performance Metric | | | Metric Weighting | | | | Description | Performance Measured By | | | Financial Goals | Sales | Rewards NEOs on effective merchandising, driving market share gains and the enhancement of the Company’s omnichannel sales and marketing | Company sales | 40% | | | Operating Income | Rewards NEOs for profitability of Company operations and focuses management on operational efficiency and expense management | Company operating income | 40% | | Strategic Goals | Inventory Turnover | Rewards NEOs for focusing on improving inventory management, which generates cash flow for investing in the business and returning value to shareholders | Cost of goods sold / average inventory | 10% | | | Pro Sales Growth | Rewards NEOs for focusing on growing Pro market share, which drives long-term sustainable sales growth and profitability for the business | Percentage increase in Pro customer sales over the prior fiscal year | 10% |
Annual Incentive Awards
The financial metrics currently utilized in our annual incentive awards have remained consistent for the past several years, as they remain key performance measures that our Board and management focus on. Other metrics within the annual incentive awards have evolved over time, as the Compensation Committee has sought to align the program with updates to our strategic priorities and to reflect feedback from our shareholders. For fiscal 2023, the Compensation Committee:
Annual Incentive Awards
| • | Approved the terms for our annual incentive awards, maintaining the same performance metrics and weightings used in 2022, which the Compensation Committee determined continue to align with the Company’s strategic growth priorities; and |
Annual Incentive Awards
| • | Removed the 250% maximum plus payout performance opportunity for sales and operating income metrics, which had been adopted solely for the fiscal 2022 annual incentive award, setting maximum payout at 200% of target. |
Annual Incentive Awards
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Annual Incentive Awards
The Compensation Committee determines annual incentive plan performance goals after the Company reports earnings for the prior fiscal year and establishes goals that:
Annual Incentive Awards
| • | Are sufficiently rigorous based on the Company’s strategy, annual internal operating plan and financial guidance provided to investors for the upcoming fiscal year; |
Annual Incentive Awards
| • | Appropriately consider both prior year performance and the potential impact of the macroeconomic environment on future business conditions for the Company; and |
Annual Incentive Awards
| • | Motivate management to create sustainable shareholder value, both during the performance period and over the long term. |
Annual Incentive Awards
| | Performance Metric | How 2023 Goals Were Set | | Financial Goals | Sales | • Target set consistent with our 2023 sales guidance range provided to the market on March 1, 2023 considering headwinds related to the challenging macroeconomic environment, and lower than 2022 actual performance taking into account the Company’s sale of its Canadian retail business in 2022 and the impact of an additional week in fiscal 2022 • Maximum set approximately $3 billion above our 2023 guidance range | | | Operating Income | • Target set within our 2023 operating income guidance range provided to the market on March 1, 2023 and lower than 2022 adjusted results, also taking into account the Company’s sale of its Canadian retail business and the impact of an additional week in fiscal 2022 • Maximum set $500 million above our 2023 guidance range | | Strategic Goals | Inventory Turnover | • Target set slightly below 2022 actual performance, reflecting the same factors affecting financial goals | | | Pro Sales Growth | • Target set at 2% based on exceeding market growth expectations for the Pro customer over fiscal 2022, which included a 53rd week |
Annual Incentive Awards
The Compensation Committee’s objectives in administering our annual incentive plan are to cause incentive awards to be calculated on a comparable basis from year-to-year and to ensure that plan participants are incentivized and rewarded appropriately for Company performance. For these reasons, the Compensation Committee may make adjustments to the achievement under each performance goal at its discretion and has adopted adjustment guidelines. The adjustment guidelines provide the Committee flexibility to approve adjustments to incentive plan compensation in certain circumstances, including adjustments to account for (i) amounts required to be reported separately under applicable accounting standards as extraordinary items, (ii) gains or losses as a result of changes in accounting principles, (iii) impact of changes in tax regulations, (iv) business results from unplanned acquisitions and divestitures, (v) costs and any other non-recurring items related to acquisition and divestiture activity, (vi) unplanned debt restructuring costs or costs associated with change in capital structure, (vii) costs of significant unplanned initiatives or investments and (viii) significant changes to stock buyback programs or capital restructuring. The guidelines also provide that adjustments may be made in certain cases depending on the relevant facts and circumstances to account for: (i) impact of foreign currency fluctuations, (ii) impact of tariffs and unanticipated regulatory and policy changes, (iii) asset impairments or write-offs, including store closing costs, (iv) restructuring costs, (v) litigation costs and settlements for historical transactions, (vi) timing impact for items accelerated or delayed near year-end, (vii) acts of God and (viii) impact of global pandemics and public health emergencies. In March 2024, the Compensation Committee reviewed the Company’s 2023 performance results relative to the goals to determine the annual incentive awards earned under the annual incentive plan for fiscal year 2023. The Company’s 2023 performance results were between threshold and target performance levels for all four metrics. Consistent with the adjustment guidelines’ provisions for non-recurring items related to divestitures, the Compensation Committee determined to exclude a $63 million gain in the first quarter of fiscal 2023 associated with the Company’s sale of its Canadian retail business for purposes of determining operating income performance. This adjustment had the overall effect of modestly reducing the achievement result for operating income performance and thus, the overall payout for this year.
Annual Incentive Awards
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Annual Incentive Awards
Based on the performance metrics established by the Compensation Committee and the Compensation Committee’s assessment of the Company’s 2023 performance, the Compensation Committee determined that Lowe’s achieved 62.97% of the target incentive opportunities for the NEOs.
Annual Incentive Awards
| * Dollars in millions. |
Annual Incentive Awards
| (1) The Compensation Committee approved an adjustment to operating income as described on page 40. |
Annual Incentive Awards
| (2) Pro sales growth is based on fiscal year performance. Fiscal 2023 was a 52-week fiscal year, compared to fiscal 2022, which included an additional week. |
Annual Incentive Awards
Based on results of the performance metrics approved by the Compensation Committee, the NEOs earned annual incentive awards for 2023 as follows:
Annual Incentive Awards
| Name | Base Salary(1)x | Target Award % (% of Base Salary)x | Performance Goal Achievement Level (% of Target) | = | Actual Award Earned | | Marvin R. Ellison | $1,450,000 | 200% | 62.97% | | $1,826,130 | | Brandon J. Sink | $718,577 | 100% | 62.97% | | $452,488 | | Joseph M. McFarland III | $857,704 | 100% | 62.97% | | $540,096 | | William P. Boltz | $840,650 | 100% | 62.97% | | $529,357 | | Juliette W. Pryor | $561,099 | 100% | 62.97% | | $353,324 |
Annual Incentive Awards
| (1) Based on base salary eligible earnings in fiscal year 2023 with 2022 and 2023 base salaries pro-rated for the number of days in the fiscal year prior to and following the March 2023 effective date for 2023 base salary adjustments. Ms. Pryor’s base salary was pro-rated based on her May 3, 2023 start date. |
Annual Incentive Awards
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Long-Term Equity Awards
Long-Term Equity Awards In March each year, the Compensation Committee approves a target long-term equity award for each executive officer, expressed as a percentage of base salary, and for 2023 approved an equity award mix for the NEOs of:
Long-Term Equity Awards
| • | 50% PSUs |
Long-Term Equity Awards
| • | 25% stock options |
Long-Term Equity Awards
| • | 25% time-vested RSAs |
Long-Term Equity Awards
Target awards are determined based on each executive officer’s position and level of responsibility, the Company’s historical grant practices and market benchmarks reviewed annually by the Compensation Committee. For fiscal 2023, target awards as a percentage of base salary increased from 850% to 1,000% for the CEO to position Mr. Ellison’s target total pay competitively for the long-term as compared to benchmarking of peers and to recognize the Company’s sustained performance and substantial ROIC improvement during Mr. Ellison’s tenure, and from 450% to 500% for Messrs. McFarland and Boltz given their critical role in driving Lowe’s Total Home strategy and tenure at their position. The Compensation Committee approved a target award as a percentage of base salary of 300% in connection with the hiring of Ms. Pryor as Executive Vice President, Chief Legal Officer and Corporate Secretary, effective May 3, 2023. 2023 Award Mix. For 2023, the Compensation Committee did not change the award mix and weightings from the prior year. The Compensation Committee believes the mix of equity award types continues to create an appropriate balance between providing incentive compensation for the achievement of Company-specific performance measures (PSUs), increases in the market value of the common stock (stock options) and retention (RSAs). 2023 Target Value. The following table reflects the target value of long-term equity awarded to each NEO for 2023, both expressed as a percentage of base salary and in dollars.
Long-Term Equity Awards
| | 2023 Target Long-Term | Target Total Equity | | Name | % of Base Salary(1) | Award Value ($000s)(2) | | Marvin R. Ellison | 1,000% | $14,500 | | Brandon J. Sink | 450% | $3,245 | | Joseph M. McFarland III | 500% | $4,303 | | William P. Boltz | 500% | $4,222 | | Juliette W. Pryor | 300% | $2,220 |
Long-Term Equity Awards
| (1) Base salary considered for long-term incentive plan purposes is as of April 1, 2023 for the NEOs other than Ms. Pryor, and as of May 3, 2023 for Ms. Pryor. |
Long-Term Equity Awards
| (2) Target total equity award values are rounded to the nearest thousand dollars. |
Long-Term Equity Awards
2023 PSU Performance Metrics. The Compensation Committee determined that the PSUs awarded in 2023 will be earned based on the Company’s ROIC for the three-year performance period of fiscal years 2023 through 2025 and the relative TSR modifier. ROIC is computed by dividing the Company’s lease adjusted net operating profit after taxes for the year by the average of the Company’s invested capital as of the beginning and end of the fiscal year. Invested capital for these purposes means the average of the current year and prior year ending debt and shareholders’ (deficit)/equity. See Appendix A for our fiscal 2023 ROIC calculation. The return percentages for each fiscal year in the performance period are averaged to yield a ROIC measure for the three-year performance period. The Compensation Committee believes strong ROIC performance is aligned with creating long-term value for the Company’s shareholders. Specifically, ROIC is a comprehensive long-term financial metric that incorporates both operating profit and balance sheet performance in the calculation. This metric motivates management to generate sustained profitable growth over time while balancing the Company’s effectiveness at allocating capital to drive future investment and growth. The relative TSR modifier also helps align executive outcomes with the creation of long-term shareholder value by reducing payouts when the Company’s TSR underperforms the median performance of companies listed in the S&P 500 Index and increasing payouts when the Company’s TSR outperforms the median performance of companies listed in the S&P 500 Index, subject to a 200% cap on payouts.
Long-Term Equity Awards
| 42 | NOTICE OF ANNUAL MEETING & PROXY STATEMENT 2024 | |
Long-Term Equity Awards
The chart below illustrates how the relative TSR modifier influences the payout opportunity of the 2023 PSU performance award to range from 34% of target at threshold performance to 200% of target at maximum performance:
Long-Term Equity Awards
| Target Number of PSUs Granted | ROIC Performance Level | Payout Percentage (% of Target Award)(1) | Lowe’s 3-Year TSR Percentage Spread from Median of Companies in S&P 500 Index | Modifier(1) | | PSU Performance Level | Final Payout Opportunity (% of Target Award)(1) | | | Maximum | 150% | ≥+20% | 1.33x | | Maximum | 200% | | x | Target | 100%x | 0% | 1.00x | = | Target | 100% | | | Threshold | 50% | ≤ (20)% | 0.67x | | Threshold | 34% | | | <Threshold | 0% | | | | <Threshold | 0% |
Long-Term Equity Awards
| (1) Performance between discrete points will be interpolated; TSR modifier cannot be lower than 0.67x or higher than 1.33x; if ROIC is below threshold, there will be no payout. |
Long-Term Equity Awards
In line with the factors described above in setting targets for annual incentive awards, the Compensation Committee determines ROIC targets in the year the PSUs are granted, with an aim to set goals that are sufficiently rigorous based on the Company’s internal long range plan, appropriately consider recent performance and the potential impact of the macroeconomic environment, and motivate management to create sustainable shareholder value over the long-term. 2021 PSU Awards. The performance period for the PSUs awarded in 2021 (the “2021 PSUs”) ended on February 2, 2024, the last day of the 2023 fiscal year. The 2021 PSUs were eligible to be earned based on the Company’s average ROIC and relative TSR performance for fiscal years 2021 through 2023. The Compensation Committee set the target ROIC performance level for the 2021 PSUs based on achievement of average ROIC goals over the performance period. Threshold and maximum ROIC performance levels were set at 90% and 110%, respectively, as a percentage of the target performance level. Based on the performance levels set by the Compensation Committee, the Company’s adjusted ROIC performance as determined by the Committee, and strong relative TSR performance during the performance period, 183.06% of the 2021 PSUs were earned and converted into shares of common stock. For purposes of determining the Company’s ROIC performance and the number of PSUs earned, the Compensation Committee determined to exclude, consistent with its adjustment guidelines, the cumulative impact on net operating profit after taxes of $2.3 billion and average invested capital of $1.1 billion associated with the Company’s sale of its Canadian retail business (which would have reduced three-year average ROIC by 2.58%). Both on a reported and as adjusted basis, ROIC exceeded the maximum performance level.
Long-Term Equity Awards
| Performance Metric | Threshold | Target | Maximum | 2021-2023 Adjusted Performance | TSR Modifier | Performance Goal Achievement (% of Target) | | ROIC | 27.0% | 30.0% | 33.0% | 36.7% | 1.22(1) | 183.06% |
Long-Term Equity Awards
| (1) Based on Lowe’s fiscal year 2021-2023 TSR spread exceeding the median performance of companies listed in the S&P 500 Index by 13.4%. |
Long-Term Equity Awards
2023 Stock Option Awards. The Compensation Committee views options as performance-based incentive compensation as they provide no realizable value to recipients if our share price does not increase from the grant date. These awards promote the value-creating actions necessary to increase the market value of our common stock. The number of options awarded is calculated based on the Black-Scholes option pricing model. The exercise price of stock options is set at 100% of the fair market value of our common stock on the date of grant. Stock options granted to our NEOs in 2023 vest ratably over a three-year period and have a ten-year term. 2023 RSAs. RSAs promote executive retention, stock ownership and alignment with shareholders’ interests. The number of RSAs awarded is determined based on the fair market value of our common stock as of the grant date. RSAs awarded to our NEOs in 2023 cliff vest after three years.
Long-Term Equity Awards
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Long-Term Equity Awards
OTHER COMPENSATION POLICIES
Chief Legal Officer and Corporate Secretary Compensation
Chief Legal Officer and Corporate Secretary Compensation In March 2023, after discussion and review with its independent compensation consultant, the Compensation Committee approved Ms. Pryor’s annual compensation and certain sign-on cash and equity awards for her service as the Company’s Executive Vice President, Chief Legal Officer and Corporate Secretary. Ms. Pryor’s target total compensation package includes a base salary of $740,000, target annual incentive opportunity of 100% of base salary and long-term incentive target of 300% of base salary. Additionally, to offset cash sign-on and retention awards forfeited by Ms. Pryor upon departure from her former employer, the Compensation Committee approved a $3,050,000 sign-on cash bonus paid out in three installments through January 2024 and which is subject to certain repayment conditions. Solely to offset equity compensation forfeited by Ms. Pryor upon departure from her former employer, the majority of which had already satisfied performance-based vesting conditions and was only subject to continued service-based vesting conditions, the Compensation Committee approved a sign-on equity award with a target fair value of $5,574,260 consisting of time-based RSAs that vest over three years, with each vesting date equivalent to or later than the original vesting dates of her forfeited awards.
Severance Arrangements
Severance Arrangements The amended and restated severance plan for senior executives (the “Severance Plan”) covers all current NEOs other than Mr. Ellison. The terms of the Severance Plan are described on page 54. Mr. Ellison’s severance entitlements are governed by his offer letter, the terms of which are described on page 54. All NEOs are also parties to agreements that provide severance benefits in the context of a change-in-control of the Company (the “Change-in-Control Agreements”). The Change-in-Control Agreements are described beginning on page 53.
Summary Compensation Table
Summary Compensation Table This table shows the base salary, annual incentive compensation and all other compensation paid to the NEOs. The table also shows the grant date fair value of the stock and option awards made to the NEOs.
Summary Compensation Table
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2)(3) | Option Awards ($)(2) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) | | Marvin R. Ellison Chairman, President and Chief Executive Officer | 2023 | 1,450,000 | — | 11,193,496 | 3,591,228 | 1,826,130 | 101,418 | 18,162,272 | | | 2022 | 1,450,000 | — | 9,172,764 | 3,099,490 | 3,707,360 | 42,391 | 17,472,005 | | | 2021 | 1,450,000 | — | 8,248,835 | 2,595,136 | 5,503,040 | 74,704 | 17,871,716 | | Brandon J. Sink Executive Vice President, Chief Financial Officer | 2023 | 718,577 | — | 2,505,076 | 803,703 | 452,488 | 69,913 | 4,549,757 | | | 2022 | 620,868 | — | 1,329,324 | 1,119,902 | 764,133 | 75,605 | 3,909,833 | | Joseph M. McFarland III Executive Vice President, Stores | 2023 | 857,704 | — | 3,321,989 | 1,065,757 | 540,096 | 8,384 | 5,793,930 | | | 2022 | 832,291 | — | 2,798,505 | 945,602 | 1,064,000 | 33,903 | 5,674,302 | | | 2021 | 807,000 | — | 2,581,966 | 812,263 | 1,531,363 | 4,893 | 5,737,487 | | William P. Boltz Executive Vice President, Merchandising | 2023 | 840,650 | — | 3,259,415 | 1,045,694 | 529,357 | 68,323 | 5,743,439 | | | 2022 | 806,789 | — | 2,719,575 | 918,946 | 1,031,399 | 96,792 | 5,573,501 | | | 2021 | 769,202 | — | 2,461,012 | 774,208 | 1,459,638 | 129,371 | 5,593,431 | | Juliette W. Pryor Executive Vice President, Chief Legal Officer and Corporate Secretary | 2023 | 561,099 | 3,050,000 | 7,334,573 | 549,584 | 353,324 | 293,253 | 12,141,833 |
Summary Compensation Table
| (1) The amount reported in this column for Ms. Pryor represents a sign-on bonus of $3,050,000 provided under her offer letter. |
Summary Compensation Table
| (2) The value of the stock and option awards presented in the table equals the grant date fair value of the awards for financial reporting purposes (excluding the effect of estimated forfeitures) computed in accordance with FASB ASC Topic 718. For financial reporting purposes, the Company determines the fair value of a stock or option award accounted for as an equity award on the grant date. The Company recognizes an expense for a stock or option award over the vesting period of the award. PSUs are expensed over the vesting period based on the probability of achieving the performance goal, with changes in expectations recognized as an adjustment in the period of the change. NEOs receive dividends on unvested shares of time-vested RSAs during the vesting period. Dividends are not paid or accrued on unearned PSUs. The right to receive dividends has been factored into the determination of the fair values used in the amounts presented above. |
Summary Compensation Table
| The assumptions used to calculate the April grant date fair value of the option awards granted in fiscal 2023 for Messrs. Ellison, Sink, McFarland and Boltz are as follows: expected volatility of 31.46%, expected dividend yield of 1.74%, an assumed risk-free interest rate of 3.55% and expected term of seven years. Ms. Pryor was awarded an option award on June 15, 2023 and the assumptions used to calculate the grant date fair value of this award are as follows: expected volatility of 31.58%, expected dividend yield of 1.77%, an assumed risk-free interest rate of 3.82% and expected term of seven years. See footnote 5 to the Grants of Plan-Based Awards table below and Note 10, “Share-Based Payments,” to the Company’s consolidated financial statements in its Annual Report on Form 10-K for the fiscal year ended February 2, 2024 for additional information about the Company’s accounting for share-based compensation arrangements, including the assumptions used in calculating the grant date fair values. |
Summary Compensation Table
| (3) The amounts reported in this column include the sum of the grant date fair values of PSUs and RSAs. The 2023 PSUs will be earned based on the Company’s achievement of a three-year average ROIC goal and a relative TSR modifier. The PSUs are accounted for as equity awards. The 2023 stock award amounts include the following grant date fair values of the PSUs: Mr. Ellison — $7,568,440; Mr. Sink — $1,693,798; Mr. McFarland — $2,246,150; Mr. Boltz — $2,203,774; and Ms. Pryor — $1,204,971. The grant date fair values of the PSUs, assuming the maximum number of shares would be earned at the end of the three-year performance period, would have been: Mr. Ellison — $15,136,880; Mr. Sink — $3,387,595; Mr. McFarland — $4,492,300; Mr. Boltz — $4,407,548; and Ms. Pryor — $2,409,942. |
Summary Compensation Table
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Summary Compensation Table
| (4) The amounts shown in this column reflect payments made under the Company’s annual incentive plan, which paid out at 62.97% for NEOs based on performance achievement described in more detail on page 41. |
Summary Compensation Table
| (5) Company matching contributions to qualified and non-qualified deferred compensation plans and perquisites for the 2023 fiscal year are shown below: |
Summary Compensation Table
| | Company Matching Contributions to: | | | | | | | | Name | 401(k) Plan ($) | Benefit Restoration Plan ($) | Personal Use of Corporate Aircraft ($) | Relocation ($)(i) | Tax Gross Up Payments ($)(ii) | Other ($)(iii) | Total ($) | | Mr. Ellison | — | — | 91,373 | — | — | 10,045 | 101,418 | | Mr. Sink | 11,987 | 37,749 | — | — | — | 20,177 | 69,913 | | Mr. McFarland III | — | — | — | — | — | 8,384 | 8,384 | | Mr. Boltz | 12,751 | 45,421 | — | — | — | 10,151 | 68,323 | | Ms. Pryor | 13,306 | 15,016 | — | 143,187 | 108,073 | 13,671 | 293,253 |
Summary Compensation Table
All amounts presented in the table above, other than the amount for Mr. Ellison’s personal use of corporate aircraft, equal the actual cost to the Company of the particular benefit or perquisite provided. The amount presented for personal use of corporate aircraft is equal to the incremental cost to the Company of such use. Incremental cost includes fuel, landing and ramp fees and other variable costs directly attributable to personal use. Incremental cost does not include an allocable share of the fixed costs associated with the Company’s ownership of the aircraft.
Summary Compensation Table
| (i) Ms. Pryor was provided relocation assistance in connection with her hiring. The relocation assistance provided is generally comparable to the relocation program provided as a benefit to other executives who relocate. Items in this column include expenses through November 30, 2023. |
Summary Compensation Table
| (ii) The tax gross-up for Ms. Pryor of $108,073 is related to her relocation expenses. |
Summary Compensation Table
| (iii) | “Other” perquisites and benefits include tax and financial planning services, Company-encouraged physical examinations, individual disability insurance and corporate recognition gifts. |
Summary Compensation Table
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Grants of Plan-Based Awards
Grants of Plan-Based Awards This table presents the potential annual incentive awards the NEOs were eligible to earn in fiscal 2023, as well as the stock options, RSAs and PSUs awarded to the NEOs in fiscal 2023 and the grant date fair value of those awards.
Grants of Plan-Based Awards
| Name | Grant Date | Date of Committee Action | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | All Other Option Awards: Number of Securities Underlying Options (#)(4) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards ($)(5) | | | | | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | | | | | | Mr. Ellison | | | | | | | | | | | | | | Annual Incentive | | | 725,000 | 2,900,000 | 5,800,000 | | | | | | | | | PSUs | 4/1/2023 | 3/24/2023 | | | | 12,327 | 36,256 | 72,512 | | | | 7,568,440 | | Options | 4/1/2023 | 3/24/2023 | | | | | | | | 55,488 | 199.97 | 3,591,228 | | RSAs | 4/1/2023 | 3/24/2023 | | | | | | | 18,128 | | | 3,625,056 | | Mr. Sink | | | | | | | | | | | | | | Annual Incentive | | | 179,644 | 718,577 | 1,437,154 | | | | | | | | | PSUs | 4/1/2023 | 3/24/2023 | | | | 2,758 | 8,114 | 16,228 | | | | 1,693,798 | | Options | 4/1/2023 | 3/24/2023 | | | | | | | | 12,418 | 199.97 | 803,703 | | RSAs | 4/1/2023 | 3/24/2023 | | | | | | | 4,057 | | | 811,278 | | Mr. McFarland III | | | | | | | | | | | | | | Annual Incentive | | | 214,426 | 857,704 | 1,715,408 | | | | | | | | | PSUs | 4/1/2023 | 3/24/2023 | | | | 3,658 | 10,760 | 21,520 | | | | 2,246,150 | | Options | 4/1/2023 | 3/24/2023 | | | | | | | | 16,467 | 199.97 | 1,065,757 | | RSAs | 4/1/2023 | 3/24/2023 | | | | | | | 5,380 | | | 1,075,839 | | Mr. Boltz | | | | | | | | | | | | | | Annual Incentive | | | 210,163 | 840,650 | 1,681,300 | | | | | | | | | PSUs | 4/1/2023 | 3/24/2023 | | | | 3,589 | 10,557 | 21,114 | | | | 2,203,774 | | Options | 4/1/2023 | 3/24/2023 | | | | | | | | 16,157 | 199.97 | 1,045,694 | | RSAs | 4/1/2023 | 3/24/2023 | | | | | | | 5,279 | | | 1,055,642 | | Ms. Pryor | | | | | | | | | | | | | | Annual Incentive | | | 140,275 | 561,099 | 1,122,198 | | | | | | | | | PSUs | 6/15/2023 | 3/23/2023 | | | | 1,724 | 5,071 | 10,142 | | | | 1,204,971 | | Options | 6/15/2023 | 3/23/2023 | | | | | | | | 7,632 | 218.93 | 549,584 | | RSAs | 6/15/2023 | 3/23/2023 | | | | | | | 25,462 | | | 5,574,396 | | RSAs | 6/15/2023 | 3/23/2023 | | | | | | | 2,536 | | | 555,206 |
Grants of Plan-Based Awards
| (1) The NEOs are eligible to earn annual incentive compensation under the Company’s annual incentive plan for each fiscal year based on the Company’s achievement of one or more performance measures established at the beginning of the fiscal year by the Compensation Committee. For the 2023 fiscal year ended February 2, 2024, the performance measures selected by the Compensation Committee were the Company’s sales (weighted 40%), operating income (weighted 40%), inventory turnover (weighted 10%) and Pro sales growth (weighted 10%). The performance levels for the performance measures, the Company’s actual performance and the amounts earned by the NEOs for the 2023 fiscal year are shown on page 41. The annual incentive amounts actually earned by the NEOs for the 2023 fiscal year are reported in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table on page 47. |
Grants of Plan-Based Awards
| (2) The PSUs reported in this column are earned based on the Company’s average ROIC over a three-year performance period and a relative TSR modifier. No dividends will accrue or be paid on the PSUs during the three-year performance period. The terms of the PSUs are described in more detail beginning on page 42. |
Grants of Plan-Based Awards
| (3) The time-vested RSAs vest on the third anniversary of the grant date or, if earlier, the date the NEO terminates employment due to death or disability. For the NEOs who meet the retirement provisions of the applicable RSA grant agreements, their awards will vest upon retirement, but will not be transferred to the NEO until the original vesting date of the award. Retirement for this purpose is defined as the voluntary termination of employment with the approval of the Board at least six months after the grant date and on or after the date the NEO has satisfied an age and service requirement, provided the NEO has given the Board advance notice of such retirement. Messrs. Ellison, Sink, McFarland and Boltz and Ms. Pryor will satisfy the age and service requirement for retirement once their age in addition to years of service equals at least 70, provided the NEO is at least 55 years old. Ms. Pryor received an award of 25,462 shares of RSAs as described on page 44, with 5,226 shares vesting on June 15, 2024 and 20,236 shares vesting on June 15, 2026. The NEOs receive cash dividends paid with respect to the RSA shares during the vesting period on the same terms as the other shareholders of the Company. |
Grants of Plan-Based Awards
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Grants of Plan-Based Awards
| (4) All options have a 10-year term and an exercise price equal to the closing price of the common stock on the grant date. The options vest in three annual installments on each of the first three anniversaries of the grant date or, if earlier, the date the NEO terminates employment due to death or disability. The options granted to the NEOs will become exercisable in the event of retirement, as defined in the applicable grant agreement, in accordance with the original three-year vesting schedule and remain exercisable until their expiration dates. |
Grants of Plan-Based Awards
| (5) Amounts represent the grant date fair value of awards granted in fiscal 2023 for financial reporting purposes (excluding the effect of estimated forfeitures) computed in accordance with FASB ASC Topic 718. The assumptions used to calculate the April grant date fair value of the option awards granted in fiscal 2023 for Messrs. Ellison, Sink, McFarland and Boltz are as follows: expected volatility of 31.46%, expected dividend yield of 1.74%, an assumed risk-free interest rate of 3.55% and expected term of seven years. Ms. Pryor was awarded an option award on June 15, 2023 and the assumptions used to calculate the grant date fair value of this award are as follows: expected volatility of 31.58%, expected dividend yield of 1.77%, an assumed risk-free interest rate of 3.82% and expected term of seven years. The assumptions made in the valuation of the PSU awards granted in fiscal 2023 for Messrs. Ellison, Sink, McFarland and Boltz are as follows: expected volatility of 29.3%, expected dividend yield of 2.10%, an assumed risk-free interest rate of 3.82% and expected term of 2.83 years. Ms. Pryor was awarded a PSU award on June 15, 2023 and the assumptions used to calculate the grant date fair value of this award are as follows: expected volatility of 29.3%, expected dividend yield of 2.01%, an assumed risk-free interest rate of 4.33% and expected term of 2.63 years. The valuation of the time-vested RSAs is based on the closing price of our common stock on the grant date. |
Grants of Plan-Based Awards
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Outstanding Equity Awards at Fiscal Year-End
Outstanding Equity Awards at Fiscal Year-End This table presents information about unearned or unvested stock and option awards held by the NEOs on February 2, 2024.
Outstanding Equity Awards at Fiscal Year-End
| | Option Awards | | | | Stock Awards | | | | | Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(1) | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | Equity Incentive Plan Awards; Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(3) | Equity Incentive Plan Awards; Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | | Mr. Ellison | 166,240 | — | 94.87 | 7/2/2028 | 46,900 | 10,294,081 | 124,034 | 27,224,223 | | | 82,460 | — | 108.93 | 4/1/2029 | | | | | | | 120,014 | — | 80.42 | 4/1/2030 | | | | | | | 34,461 | 17,230(4) | 191.32 | 4/1/2031 | | | | | | | 17,326 | 34,650(5) | 202.40 | 4/1/2032 | | | | | | | — | 55,488(6) | 199.97 | 4/1/2033 | | | | | | Mr. Sink | 733 | — | 108.93 | 4/1/2029 | 10,771 | 2,364,127 | 8,722 | 1,914,392 | | | 2,395 | — | 102.20 | 7/1/2029 | | | | | | | 4,153 | — | 80.42 | 4/1/2030 | | | | | | | 1,199 | 599(4) | 191.32 | 4/1/2031 | | | | | | | 580 | 1,160(5) | 202.40 | 4/1/2032 | | | | | | | 6,003 | 12,006(7) | 179.01 | 6/15/2032 | | | | | | | — | 12,418(6) | 199.97 | 4/1/2033 | | | | | | Mr. McFarland III | 43,810 | — | 114.07 | 10/1/2028 | 14,266 | 3,131,244 | 38,068 | 8,355,545 | | | 30,190 | — | 108.93 | 4/1/2029 | | | | | | | 41,988 | — | 80.42 | 4/1/2030 | | | | | | | 10,786 | 5,393(4) | 191.32 | 4/1/2031 | | | | | | | 5,286 | 10,571(5) | 202.40 | 4/1/2032 | | | | | | | — | 16,467(6) | 199.97 | 4/1/2033 | | | | | | Mr. Boltz | 10,281 | 5,140(4) | 191.32 | 4/1/2031 | 13,835 | 3,036,644 | 36,745 | 8,065,160 | | | 5,137 | 10,273(5) | 202.40 | 4/1/2032 | | | | | | | — | 16,157(6) | 199.97 | 4/1/2033 | | | | | | Ms. Pryor | — | 7,632(8) | 218.93 | 6/15/2033 | 27,998 | 6,145,281 | 3,380 | 741,876 |
Outstanding Equity Awards at Fiscal Year-End
| (1) The unvested RSAs vest as follows: |
Outstanding Equity Awards at Fiscal Year-End
| | 4/1/2024 | 6/15/2024 | 4/1/2025 | 6/15/2025 | 4/1/2026 | 6/15/2026 | Total | | Mr. Ellison | 13,548 | — | 15,224 | — | 18,128 | — | 46,900 | | Mr. Sink | 458 | — | 495 | 5,761 | 4,057 | — | 10,771 | | Mr. McFarland III | 4,241 | — | 4,645 | — | 5,380 | — | 14,266 | | Mr. Boltz | 4,042 | — | 4,514 | — | 5,279 | — | 13,835 | | Ms. Pryor | — | 5,226 | — | — | — | 22,772 | 27,998 |
Outstanding Equity Awards at Fiscal Year-End
| (2) Amount is based on the closing market price of the Company’s common stock on February 2, 2024 of $219.49. |
Outstanding Equity Awards at Fiscal Year-End
| (3) The number of unearned PSUs reported in this column is calculated in accordance with SEC requirements and is based on our actual performance results for the 2021, 2022 and 2023 PSUs through the end of fiscal 2023 under the applicable performance measures and assuming that the payout will occur at the next highest level (threshold, target or maximum) relative to actual performance results. |
Outstanding Equity Awards at Fiscal Year-End
| (4) These options vest in one annual installment on April 1, 2024. |
Outstanding Equity Awards at Fiscal Year-End
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Outstanding Equity Awards at Fiscal Year-End
| (5) These options vest in two annual installments on April 1, 2024 and April 1, 2025. |
Outstanding Equity Awards at Fiscal Year-End
| (6) These options vest in three annual installments on April 1, 2024, April 1, 2025 and April 1, 2026. |
Outstanding Equity Awards at Fiscal Year-End
| (7) These options vest in two annual installments on June 15, 2024 and June 15, 2025. |
Outstanding Equity Awards at Fiscal Year-End
| (8) These options vest in three annual installments on June 15, 2024, June 15, 2025 and June 15, 2026. |
Option Exercises and Stock Vested at Fiscal Year-End
Option Exercises and Stock Vested at Fiscal Year-End This table presents information about stock options exercised by the NEOs and the number and the value of the NEOs’ stock awards that vested during the 2023 fiscal year.
Option Exercises and Stock Vested at Fiscal Year-End
| | Option Awards | | Stock Awards | | | | Number of Shares Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting | | Name | (#) | ($) | (#) | ($) | | Mr. Ellison | — | — | 138,618 | 27,719,441 | | Mr. Sink | — | — | 5,594 | 1,117,778 | | Mr. McFarland III | — | — | 48,498 | 9,698,145 | | Mr. Boltz | 13,341 | 1,635,340 | 46,228 | 9,244,213 | | Ms. Pryor | — | — | — | — |
Non-Qualified Deferred Compensation
Non-Qualified Deferred Compensation The Company sponsors two non-qualified deferred compensation plans for the benefit of senior management employees: the Benefit Restoration Plan (the “BRP”) and the Cash Deferral Plan (the “CDP”).
Potential Payments Upon Termination or Change-in-Control
Potential Payments Upon Termination or Change-in-Control The Company has entered into Change-in-Control Agreements with each of the current NEOs and certain other senior officers of the Company. The agreements provide for certain benefits if the Company experiences a change-in-control followed by termination of the executive’s employment within 24 months following such change-in-control:
Potential Payments Upon Termination or Change-in-Control
| • | By the Company’s successor without Cause, which means continued and willful failure to perform duties or conduct demonstrably and materially injurious to the Company or its affiliates; or |
Potential Payments Upon Termination or Change-in-Control
| • | By the executive for Good Reason, including a downgrading of the executive’s position or duties or a change in compensation or geographic work location. |
Potential Payments Upon Termination or Change-in-Control
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Potential Payments Upon Termination or Change-in-Control
The following describes the material provisions of the Change-in-Control Agreements that we have entered into with our NEOs. All of the agreements automatically expire on the second anniversary of a change-in-control notwithstanding the length of the terms remaining on the date of the change-in-control.
Potential Payments Upon Termination or Change-in-Control
| Accrued Obligations | The NEO receives the sum of (1) the NEO’s annual base salary through date of separation and (2) any accrued vacation pay to the extent not paid. | | Severance Benefit | The NEO receives 2.99 times the sum of the present value of the NEO’s annual base salary, annual incentive compensation (as calculated pursuant to the agreement) and welfare insurance costs. | | No Tax Gross-Up | There are no effective provisions for an excise tax gross-up. Instead, change-in-control payments will be subject to a provision, whereby the NEO will receive either the original amount of the payment or a reduced amount, depending on which amount will provide them a greater after-tax benefit. | | Legal Fees | All legal fees and expenses reasonably incurred by the NEO in enforcing the agreement will be paid by the Company. | | Restrictive Covenants | The Change-in-Control Agreements include restrictive covenants including, but not limited to, a covenant not to compete against the Company for the longer of (a) two years following termination of employment and (b) the period from the termination of employment through the last date of vesting for any non-vested equity awards held by the NEO and a covenant not to solicit Company employees or customers for two years following termination of employment. |
Potential Payments Upon Termination or Change-in-Control
The Company’s 2006 Long Term Incentive Plan, as amended and restated (the “Long Term Incentive Plan”) provides that, if within one year after a change-in-control, an executive’s employment is terminated by the Company without Cause or by the executive for Good Reason (as defined in the Change-in-Control Agreement), then all outstanding stock options will become fully exercisable and all outstanding RSAs will become fully vested. In the event of a change-in-control of the Company, the performance periods for all outstanding PSUs will terminate as of the end of the fiscal quarter preceding the change-in-control and the PSUs will be earned based on Company performance through such date. Under the terms of stock option, RSA and PSU award agreements, the executive is subject to a covenant not to compete against the Company for 24 months following termination of employment and, in the event of a breach, will forfeit awards or be required to repay the Company certain amounts with respect to awards. Executive Vice Presidents covered by the Severance Plan who experience a Qualified Termination (as defined in the Severance Plan) are, subject to the terms of the Severance Plan, eligible to receive a benefit consisting of (i) cash severance equal to two times the sum of their annual base salary and target annual bonus to be paid in installments over 24 months in accordance with the Company’s normal payroll practices, (ii) continued participation in the employee health care plan maintained by the Company upon the same terms and conditions in effect for active employees until the earlier of the 12-month anniversary of the termination date or the date the Executive Vice President becomes covered under another employer’s health care plan and (iii) up to one year of Company-paid outplacement services. Payments made pursuant to the Severance Plan shall be reduced, in whole or in part, by all compensation received by or payable to the Executive Vice President for services rendered in any capacity to any third party during the severance period, with the exception of any compensation received for service on a board of directors or similar arrangement that existed on the termination date. In the event Mr. Ellison’s employment with the Company is terminated involuntarily other than for Cause (as defined in his offer letter), and subject to the terms of his offer letter, Mr. Ellison is entitled to receive severance payments equal to two times the sum of his annual base salary and target annual bonus to be paid over 24 months in accordance with the Company’s normal payroll practices.
Potential Payments Upon Termination or Change-in-Control
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Potential Payments Upon Termination or Change-in-Control
The following table shows the amounts payable to the NEOs in the event their employment terminated at the end of the 2023 fiscal year due to their resignation, death, disability or retirement and the amounts payable under the Severance Plan, the Change-in-Control Agreements and the Long Term Incentive Plan if a change-in-control of the Company had occurred at the end of the 2023 fiscal year and/or the NEOs’ employment was terminated by the Company without Cause or by the NEO for Good Reason (in each case, as defined in the Change-in-Control Agreements) on February 2, 2024.
Potential Payments Upon Termination or Change-in-Control
| Name and Benefit | Voluntary Resignation ($) | Death ($) | Disability ($) | Retirement ($)(1) | Qualified Termination ($)(2) | Change-in-Control ($) | Change-in-Control and Qualifying Termination ($) | | Mr. Ellison | | | | | | | | | Severance(3) | — | — | — | — | 8,700,000 | — | 14,145,875 | | Stock Options(4) | — | 2,160,663 | 2,160,663 | — | — | — | 2,160,663 | | Restricted Stock Awards(4) | — | 10,294,081 | 10,294,081 | — | — | — | 10,294,081 | | Performance Share Units(5) | — | 17,344,539 | 17,344,539 | — | — | 17,344,539 | 17,344,539 | | Welfare Benefits(6) | — | — | — | — | — | — | 91,884 | | Total | — | 29,799,283 | 29,799,283 | — | 8,700,000 | 17,344,539 | 44,037,042 | | Mr. Sink | | | | | | | | | Severance(3) | — | — | — | — | 2,884,000 | — | 4,076,403 | | Stock Options(4) | — | 765,100 | 765,100 | — | — | — | 765,100 | | Restricted Stock Awards(4) | — | 2,364,127 | 2,364,127 | — | — | — | 2,364,127 | | Performance Share Units(5) | — | 577,039 | 577,039 | — | — | 577,039 | 577,039 | | Welfare Benefits(6) | — | — | — | — | 17,694 | — | 73,356 | | Parachute Payments Reduced(7) | — | — | — | — | — | — | (1,062,858) | | Total | — | 3,706,266 | 3,706,266 | — | 2,901,694 | 577,039 | 6,793,169 | | Mr. McFarland III | | | | | | | | | Severance(3) | — | — | — | — | 3,442,400 | — | 5,281,949 | | Stock Options(4) | — | 654,015 | 654,015 | — | — | — | 654,015 | | Restricted Stock Awards(4) | — | 3,131,244 | 3,131,244 | — | — | — | 3,131,244 | | Performance Share Units(5) | — | 5,377,505 | 5,377,505 | — | — | 5,377,505 | 5,377,505 | | Welfare Benefits(6) | — | — | — | — | 17,732 | — | 92,412 | | Total | — | 9,162,764 | 9,162,764 | — | 3,460,132 | 5,377,505 | 14,537,125 | | Mr. Boltz | | | | | | | | | Severance(3) | — | — | — | — | 3,377,600 | — | 5,148,070 | | Stock Options(4) | — | 635,744 | 635,744 | — | — | — | 635,744 | | Restricted Stock Awards(4) | — | 3,036,644 | 3,036,644 | — | — | — | 3,036,644 | | Performance Share Units(5) | — | 5,162,405 | 5,162,405 | — | — | 5,162,405 | 5,162,405 | | Welfare Benefits(6) | — | — | — | — | 17,732 | — | 96,241 | | Total | — | 8,834,793 | 8,834,793 | — | 3,395,332 | 5,162,405 | 14,079,103 | | Ms. Pryor | | | | | | | | | Severance(3) | — | — | — | — | 2,960,000 | — | 4,062,518 | | Stock Options(4) | — | 4,274 | 4,274 | — | — | — | 4,274 | | Restricted Stock Awards(4) | — | 6,145,281 | 6,145,281 | — | — | — | 6,145,281 | | Performance Share Units(5) | — | — | — | — | — | — | — | | Welfare Benefits(6) | — | — | — | — | 11,373 | — | 55,685 | | Total | — | 6,149,555 | 6,149,555 | — | 2,971,373 | — | 10,267,758 |
Potential Payments Upon Termination or Change-in-Control
| (1) No NEOs were eligible for retirement as of the end of the fiscal year 2023. |
Potential Payments Upon Termination or Change-in-Control
| (2) The Severance Plan described in more detail on page 54, covers all NEOs below the CEO. Mr. Ellison’s severance entitlements are governed by his offer letter, described in more detail on page 54. For Mr. Ellison, this represents an involuntary termination of employment other than for Cause (as defined in his offer letter) and for each other NEO this represents a Qualified Termination under the Severance Plan. |
Potential Payments Upon Termination or Change-in-Control
| (3) The amounts presented are payable as follows: (i) in the case of a Qualified Termination, in equal installments in accordance with the Company’s payroll practices for 24 months and (ii) in the case of a Change-in-Control and Qualified Termination, in cash in a lump sum. |
Potential Payments Upon Termination or Change-in-Control
| (4) The amounts presented for the stock options and RSAs are equal to the values of the unvested in-the-money stock options and the restricted shares that would become vested based on the closing market price of the common stock on February 2, 2024 of $219.49. |
Potential Payments Upon Termination or Change-in-Control
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Potential Payments Upon Termination or Change-in-Control
| (5) The amounts presented for the PSUs are the value for the 2021, 2022 and 2023 PSU awards that would be earned assuming estimated performance through February 2, 2024 and based on the closing market price of the common stock on February 2, 2024 of $219.49. |
Potential Payments Upon Termination or Change-in-Control
| (6) The costs for Welfare Benefits include the Company costs for continuing coverage in the case of a Qualified Termination over a period of 12 months, as well as the Company costs for outplacement of all NEOs except Mr. Ellison. In the case of a Change-in-Control and Qualified Termination, these amounts include costs to the Company and to the NEO and would be paid as a cash lump sum. Welfare Benefits costs in the case of death and disability are consistent with Company offerings for all employees. |
Potential Payments Upon Termination or Change-in-Control
| (7) Parachute Payments Reduced represents the estimated amount by which the payments and benefits that would have been payable to Mr. Sink would be reduced under the Change-in-Control Agreements or other plans in order to bring all applicable payments and benefits of such NEOs below the safe harbor limit for payments contingent on a change-in-control set forth in Code Section 280G. |
CEO Pay Ratio
CEO Pay Ratio As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding the ratio of the annual total compensation, calculated in accordance with the requirements of Item 402(c)(2)(x) of Regulation S-K (“Annual Total Compensation”), of our median-paid associate and the Annual Total Compensation of our Chairman, President and Chief Executive Officer, Marvin R. Ellison.
CEO Pay Ratio
| • | For 2023, the Annual Total Compensation for Mr. Ellison, as reported in the Summary Compensation Table on page 47, was $18,162,272. |
CEO Pay Ratio
| • | The Annual Total Compensation for 2023 for our median-paid associate, excluding Mr. Ellison, was $32,626. |
CEO Pay Ratio
| • | Based on this information, for fiscal 2023, the ratio of the Annual Total Compensation of Mr. Ellison to the Annual Total Compensation of our median associate, a full-time hourly employee, was 557 to 1. |
CEO Pay Ratio
The SEC rules for identifying the median-compensated associate and calculating the pay ratio based on that associate’s Annual Total Compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their employee populations and employment and compensation practices. As such, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employee populations and employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios. To identify our median-compensated associate for 2023, in accordance with SEC rules we used the following methodology, material assumptions, adjustments and estimates:
CEO Pay Ratio
| • | We determined our employee population as of December 31, 2023, which was within the last three months of fiscal 2023 as required by the SEC rules. As of this date, we employed a total of approximately 285,000 associates, including those employed on a full-time, part-time or temporary basis, of which approximately 4,000 were employed outside of the United States. In calculating the pay ratio we excluded, under the de minimis exception to the pay ratio rule, all of our approximately 4,000 associates who reside outside of the United States, or 1.5% of our total global workforce. |
CEO Pay Ratio
| • | We compared 2023 W-2 wages of our employee population, annualizing pay for newly hired, non-seasonal associates, as our consistently applied compensation measure (the “Estimated Compensation”). Based on the Estimated Compensation of each associate, we then identified the median-compensated associate. |
CEO Pay Ratio
| • | We then calculated the Annual Total Compensation of the median-compensated associate using the same methodology used for calculating Mr. Ellison’s Annual Total Compensation. |
CEO Pay Ratio
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Pay Versus Performance Table
Pay Versus Performance Table The following table provides a summary of compensation actually paid, as defined under SEC rules, to the principal executive officer (the “CEO”), the average compensation actually paid to the other non-CEO NEOs (the “Other NEOs”), cumulative TSR for both the Company and the Pay Versus Performance Table peer group (the S&P Retailing Industry Group Index, consistent with Item 201(e) of Regulation S-K), net income and the Company-selected financial measure of operating income (as adjusted) for fiscal years 2023, 2022, 2021 and 2020.
Pay Versus Performance Table
| | | | | | Value of Initial Fixed $100 Investment Based on: | | | | | Year | Summary Compensation Table Total for CEO ($) | Compensation Actually Paid to CEO ($) | Average Summary Compensation Table Total for Other NEOs ($) | Average Compensation Actually Paid to Other NEOs ($) | TSR ($) | Peer Group TSR ($) | Net Income ($ in millions) | Company- Selected Financial Measure: Operating Income (as adjusted) ($ in millions) | | | (1) | (2) | (3) | (4) | (5) | (6) | | (7) | | 2023 | 18,162,272 | 6,164,094 | 7,057,240 | 4,548,064 | 202.79 | 174.14 | 7,726 | 11,494 | | 2022 | 17,472,005 | 13,650,690 | 4,975,514 | (2,118,508) | 195.43 | 126.69 | 6,437 | 12,660 | | 2021 | 17,871,716 | 61,282,315 | 5,954,773 | 21,264,668 | 208.44 | 149.72 | 8,442 | 12,093 | | 2020 | 23,075,881 | 49,750,173 | 8,196,572 | 16,505,885 | 145.94 | 141.39 | 5,835 | 9,647 |
Pay Versus Performance Table
| (1) Mr. Ellison has served as CEO for all years reported. The amount in this column is “Total” compensation for the CEO as reported in the Summary Compensation Table for the applicable fiscal year. |
Pay Versus Performance Table
| (2) Compensation actually paid to the CEO is defined by the SEC to include not only actual take-home pay for the reported year, but also includes changes in the accounting fair value of vested and unvested equity awards. The equity-related values of compensation actually paid do not reflect compensation actually earned, realized or received by the Company’s NEOs. Equity award fair values were calculated at the applicable measurement date in accordance with FASB ASC Topic 718, and for outstanding PSU awards, reflect trending performance through fiscal year-end. See Note 10, “Share-Based Payments,” to the Company’s consolidated financial statements in its Annual Report on Form 10-K for the fiscal year ended February 2, 2024 for additional information about the Company’s accounting for share-based compensation arrangements, including the assumptions used in calculating the grant date fair values. A reconciliation between Summary Compensation Table Total Compensation and Compensation Actually Paid is set forth in the CEO Compensation Actually Paid table below. The reconciliations for prior fiscal years are included in the Pay Versus Performance section of the proxy statement for our 2023 Annual Meeting of Shareholders. |
Pay Versus Performance Table
| CEO Compensation Actually Paid | 2023 ($) | | Summary Compensation Table — Total Compensation | 18,162,272 | | - Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | (14,784,724) | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year (a) | 8,306,979 | | + Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | (2,560,302) | | + Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years for Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | (3,171,877) | | + Dividends Paid During Fiscal Year on Unvested Stock Awards | 211,746 | | = CEO Compensation Actually Paid (b) | 6,164,094 |
Pay Versus Performance Table
| (a) None of the awards granted during the reported year vested in the year of grant. |
Pay Versus Performance Table
| (b) The CEO was not eligible for any pension benefits. |
Pay Versus Performance Table
| (3) The amount reported in this column is the average of “Total” compensation for the Other NEOs, as reported in the Summary Compensation Table for the applicable fiscal year. The names of the Other NEOs included for these purposes in each applicable year are as follows: |
Pay Versus Performance Table
| Fiscal Year | Other NEOs | | 2023 | Brandon J. Sink, Joseph M. McFarland III, William P. Boltz and Juliette W. Pryor | | 2022 | David M. Denton (who resigned as the Company’s Executive Vice President, Chief Financial Officer, effective April 30, 2022), Brandon J. Sink (who replaced Mr. Denton as Executive Vice President, Chief Financial Officer, effective April 30, 2022), Joseph M. McFarland III, William P. Boltz and Seemantini Godbole | | 2021 | David M. Denton, Joseph M. McFarland III, William P. Boltz and Seemantini Godbole | | 2020 | David M. Denton, Joseph M. McFarland III, William P. Boltz and Marisa F. Thalberg |
Pay Versus Performance Table
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Pay Versus Performance Table
| (4) Equity award fair values were calculated at the applicable measurement date in accordance with FASB ASC Topic 718, and, for outstanding PSU awards, reflect trending performance through fiscal year-end. See Note 10, “Share-Based Payments,” to the Company’s consolidated financial statements in its Annual Report on Form 10-K for the fiscal year ended February 2, 2024 for additional information about the Company’s accounting for share-based compensation arrangements, including the assumptions used in calculating the grant date fair values. A reconciliation between Summary Compensation Table Total Compensation and Compensation Actually Paid is set forth in the Other NEO Average Compensation Actually Paid table below. The reconciliations for prior fiscal years are included in the Pay Versus Performance section of the proxy statement for our 2023 Annual Meeting of Shareholders. |
Pay Versus Performance Table
| Other NEO Average Compensation Actually Paid | 2023 ($) | | Summary Compensation Table — Total Compensation | 7,057,240 | | - Grant Date Fair Value of Option Awards and Stock Awards Granted in Fiscal Year | (4,971,448) | | + Fair Value at Fiscal Year-End of Outstanding and Unvested Option Awards and Stock Awards Granted in Fiscal Year (a) | 3,358,947 | | + Change in Fair Value of Outstanding and Unvested Option Awards and Stock Awards Granted in Prior Fiscal Years | (394,902) | | + Change in Fair Value as of Vesting Date of Option Awards and Stock Awards Granted in Prior Fiscal Years for Which Applicable Vesting Conditions Were Satisfied During Fiscal Year | (560,558) | | + Dividends paid on Stock Awards during the Fiscal Year on Unvested Stock Awards | 58,785 | | = Other NEO Average Compensation Actually Paid (b) | 4,548,064 | | (a) None of the awards granted during the reported year vested in the year of grant. (b) The Other NEOs were not eligible for any pension benefits. | |
Pay Versus Performance Table
| (5) Company TSR reflects the year-end value assuming $100 was invested in Company stock at the market closing price on the last trading day of fiscal 2019, determined consistent with reporting requirements under Item 201(e) of Regulation S-K. Source: Bloomberg Total Return Analysis. For the relevant reporting year cumulative TSR performance reflects the periods as follows: 2023, fiscal years 2020-2023; 2022, fiscal years 2020-2022; 2021, fiscal years 2020-2021. |
Pay Versus Performance Table
| (6) Peer group TSR reflects the year-end value assuming $100 was invested in the S&P Retailing Industry Group Index (the “S&P Retail Index”) at the market closing price on the last trading day of fiscal 2019, consistent with reporting requirements under Item 201(e) of Regulation S-K. For the relevant reporting year cumulative TSR performance reflects the periods as follows: 2023, fiscal years 2020-2023; 2022, fiscal years 2020-2022; 2021, fiscal years 2020-2021. |
Pay Versus Performance Table
| (7) Operating income for fiscal 2023 was adjusted for purposes of annual incentive awards to exclude the impact of a $63 million gain in the first quarter of fiscal 2023 associated with the Company’s sale of its Canadian retail business, as described on page 40. Operating income for fiscal 2022 was adjusted for purposes of annual incentive awards to exclude the impact of the Company’s sale of its Canadian retail business. The Compensation Committee did not make any adjustments to GAAP operating income under the annual incentive awards for fiscal years 2020 and 2021. |
Pay Versus Performance Table
| Most Important Performance Measures | | Sales | | Operating Income (as adjusted) | | Inventory Turnover | | Pro Sales Growth | | 3-year average ROIC | | 3-year relative TSR vs. the median of S&P 500 companies |
Pay Versus Performance Table
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Relationship Between Compensation Actually Paid and Performance Measures in Table
Relationship Between Compensation Actually Paid and Performance Measures in Table A significant portion of our executive compensation program is performance-based with a balanced focus on top- and bottom-line growth and strategic initiatives. The Company’s most important performance metrics incentivize our executives to focus on operational objectives that are expected to drive shareholder value, which impacts the value of equity awards granted to and held by our executives. Below are graphs showing the relationship of CEO and Other NEO compensation actually paid amounts to (i) the Company’s TSR and the S&P Retail Index TSR, (ii) the Company’s net income and (iii) the Company’s operating income (as adjusted).
Relationship Between Compensation Actually Paid and Performance Measures in Table
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Relationship Between Compensation Actually Paid and Performance Measures in Table
For information concerning the Company’s compensation philosophy and how the Company aligns executive compensation with financial performance, refer to the Compensation Discussion & Analysis section of this Proxy Statement.
Relationship Between Compensation Actually Paid and Performance Measures in Table
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